Case No.: 131

Doc. Type: Agreements

Parties: IN THE MATTER OF LOUIS L. LOGAN

Appearing: David J. Burns, Esq; Counsel for the Petitioner, State Ethics Commission David A. Mills, Esq: Counsel for the Respondent, Louis L. Logan

Commissioners: Vorenberg, Ch.; Kistler, Brickman, Bernstein, McLaughlin

Date: April 28, 1981

DECISION AND ORDER



Page 40


I. Procedural History


The Petitioner filed an Order to Show Cause on September 26,
1980 alleging that the Respondent, Louis L. Logan, had violated
Sections 3(b), and 4(a) and 6 of Chapter 268A, the Conflict of
Interest Law and Section 7 of Chapter 268B, the financial
disclosure law. The Petitioner subsequently amended the Order on
November 5, 1980 to allege that Logan had also violated Sections
23(a), 23(e) and 23(f) of Chapter 268A. The Respondent filed a
timely Answer and Supplemental Statement of Material Facts which
denied any violation of the aforementioned provisions.

Pursuant to notice, evidentiary hearings were conducted on
January 13, 14 and 28,1981 and February 4 and 6,1981 before
Commission Vice-Chairman, Linda H. Kistler, a duly designated
presiding officer. See M.G.L. c. 268B, s.4(c). The parties
thereafter filed post-hearing briefs on March 27, 1981 and argued
orally before the full Commission on March 30, 1981. In rendering
this decision and order, each member of the Commission has heard
and/or read the evidence and arguments presented by the parties.


II. Findings of Fact


1. Louis L. Logan is a certified public accountant. During
the period of December, 1976 to April, 1980, Mr. Logan was employed
by the Massachusetts Science and Technology Foundation (Foundation)
and its successor, Massachusetts Technology Development Corporation
(Mass. Teck) and provided financial management and technical
assistance to private companies in Massachusetts.

2. The Foundation was an entity created by the General Court
in 1969 to encourage, promote and assist scientific and
technological development in the Commonwealth. St. 1969, c. 843,
s.s.1 et seq. Foundation employees and consultants provided a broad
range of free technological and financial assistance to small and
emerging technology-based businesses.

3. Section 10 of the Foundation's enabling legislation (St.
1969, c. 843) established the following limitations on Foundation
offices and employees:

No officer or employee of the Foundation shall be in the
employ of or be in any way, directly or indirectly,
financially interested in any person, partnership, corporation
or association having any business or financial transactions
with the Foundation. No member shall act as a member of the
governing board, or vote as such, in connection with any
matter in which to his knowledge, he, his immediate family,
or any organization which he is serving as a director,
officer, trustee, partner or employee, has a financial
interest; and any member, immediately upon learning that any
such matter is being considered or proposed by the board,
shall fully disclose to the board the nature of his interest
therein.

As a Foundation employee, Logan was aware that he was prohibited
from accepting compensation from companies which dealt with the
Foundation.

4. The Foundation received an annual appropriation from the
General Court ranging from $50,000 to $280,000. The Foundation was
subject to an annual audit by the state auditor and used stationery
and forms bearing the seal of the Commonwealth. Foundation
employees were not eligible for membership in the state employee
retirement system or group insurance plan. Additionally, the
Foundation was represented by private firms for legal and financial
matters. Foundation officials regarded the Foundation as a quasi-
public organization.

Page 41

5. The General Court enacted legislation in 1978 which
abolished the Foundation and replaced it with Mass. Teck. St. 1978,
c. 497, s.s.1 et seq. Mass. Teck continued the Foundation's
management assistance functions and was additionally authorized to
lend nearly one million dollars to technologically oriented
businesses. Mass. Teck delegated the investment decision-making to
an Investment Advisory Committee (IAC) comprised of Mass. Teck
governing board members who met periodically in 1979 and 1980 to
review and discuss investment applications with the Mass. Teck

staff.

6. Section 2 of the enabling statute of Mass. Teck, G.L. c.
40G, establishes, in part, the following limitations on Mass. Teck
directors, officers and employees:

The provisions of Chapter two hundred and sixty-eight A
shall apply to all directors, officers and employees of the
MTDC, except that the corporation may invest in, purchase
from, sell to, borrow from, loan to, contract with or
otherwise deal with any person or entity in which any director
of the corporation is in any way interested or involved,
provided that such interest or involvement is disclosed in
advance to the members of the board and recorded in the
minutes of the board and provided, further that no director
having such an interest or involvement may participate in any
decision of the board relating to such person or entity.

7. During the period of December 2,1976 to September 26,1977,
Mr. Logan was employed as a consultant to the Foundation. With few
exceptions, Mr. Logan worked on a full-time five-day work week
basis at a daily compensation rate of one hundred dollars.

8. Mr. Logan assumed full-time employee status with the
Foundation on September 26, 1977 until October, 1978.

9. Mr. Logan continued as a full-time employee when Mass. Teck
succeeded the Foundation in October, 1978 and remained at Mass.
Teck until April 25,1980. His annual salary level at Mass. Teck in
1979 was approximately $28,000.[1]

10. As an employee of the Foundation and Mass. Teck and as
part of his official duties, Mr. Logan provided expert management
and financial analysis assistance to several technologically-based
Massachusetts businesses. These services included the preparation
of financial projections and assisting businesses in preparing and
pursuing loan applications with private and public financial
sources. Mr. Logan received assignments from his supervisor, Paul
Kelley, and also worked directly with John Silvers and Irving
Sacks. Dr. Silvers was the Director of the Foundation until May,
1977. Mr, Sacks served as the Director of the Foundation and later
President of Mass. Teck until April, 1980. Mr. Logan additionally
made presentations directly to Mass. Teck governing board members
during IAC meetings in 1979 and 1980.

11. New England Ocean Services, Inc. (NEOS) had developed and
was attempting to market micro-computer-based meters for underwater
use by divers in recreational, military and commercial activities.
During the period of 1977 to 1980, NEOS sought and received
considerable assistance from both the Foundation and Mass. Teck.
Mr. Logan was the principal staff member to NEOS and serviced NEOS
for approximately two hundred hours during this period. His
financial management responsibilities included assisting NEOS in
the preparation and pursuit of SBA loan applications. In
particular, Mr. Logan successfully assisted NEOS in receiving an
SBA-backed $220,000 loan from the Shawmut Bank in May, 1979.

12. The Compactor Corporation (Compactor) is a Chicopee-based
company which produces household garbage compactors. When Compactor
was referred to the Foundation in 1976 or 1977, Mr. Logan became
the principal Foundation staff member for Compactor. Mr. Logan's
assistance to Compactor began in 1977 and continued through the


summer of 1979 while at Mass. Teck. His services included providing
advice to Compactor in seeking Small Business Administration (SBA)-
backed loans, and in preparing balance sheets and financial
projections.

Page 42

13. During an unspecified period in 1977 prior to September,
Mr. Logan prepared Compactor's Massachusetts Corporation Excise Tax
Return and United States Corporation Income Tax Return for the
taxable year ending October 31, 1976. Mr. Logan performed the work
on several weekends at Compactor's office in Chicopee. Mr. Logan
did not immediately submit the returns to Compactor. On June 12,
1978, Mr. Logan forwarded duplicates of the Massachusetts and
United States tax returns to Compactor together with signing and
mailing instructions which directed Compactor to pay $254 to the
Commonwealth of Massachusetts.

14. Within one week after receiving the Massachusetts and
United States tax returns from Mr. Logan, Compactor mailed to Mr.
Logan a check for $600 as compensation for Mr. Logan's preparation
of the tax returns. Mr. Logan received and endorsed the check
shortly thereafter. During this period, Mr. Logan was a full-time
employee of the Foundation.

15. While employed as a Foundation consultant in 1977; Mr.
Logan prepared documentation for NEOS which included financial
projections and financial statements to accompany a NEOS SBA-backed
loan application. On September 20, 1977, Mr. Logan submitted a bill
to NEOS for $1,192 which included $980 for his professional
services in preparing the aforementioned documentation and $212 in
expenses. Mr. Logan wrote the following message on the bottom of
the invoice to NEOS:

Mike: Next Monday, I become a full-time employee of the
Foundation. Therefore, I can no longer be your accountant.
I'll work with my replacement to insure a smooth transition.

I know that you folks are broke. Whenever you have some
excess cash, I'd appreciate a little on account.
NEOS paid Mr. Logan $1,192 in two installments in 1978. On

March 30, 1978 and November 11, 1978, NEOS wrote two checks to Mr.
Logan for $502 and $690, respectively. Mr. Logan received the
checks in 1978 and endorsed them.

16. In January, 1978, NEOS invited a small group of outside
experts in the areas of finance, insurance and engineering,
including Mr, Logan, to serve on the NEOS Board of Advisors.
Following a discussion with his supervisor, Paul Kelley, over the
propriety of joining this group, Mr. Logan accepted the invitation.
Mr. Logan forwarded to Mr. Kelley a copy of his January 27, 1978
acceptance letter in which he stated that as a Foundation employee
he was constrained not to accept stipends, gratuities or
compensation in any form from any Foundation clients for any
services which he rendered. Mr. Logan attended a NEOS Board of
Advisors meeting in early 1978 and received and endorsed a $25
check from NEOS in April, 1978 as a fee for his advisory services.

17. On at least four occasions in 1978, Mr. Logan received
checks from NEOS which he characterized as loan reimbursements or


reimbursements for the use of his credit card which he had lent to
NEOS officers. The checks were for $512.50, $502.75, $1,000 and
$200.[2]

18. On March 14, 1978, Mr. Logan was elected to the NEOS Board
of Directors as one of its three directors.[3] Mr. Logan diligently
pursued his duties as director until his resignation on December
28,1979. In particular, Mr. Logan signed a resolution as a NEOS
director on January 12, 1979 authorizing either of the NEOS
officers, including himself, to execute a loan application to the
Shawmut Bank for up to $250,000. Shawmut subsequently approved a

Page 43

$220,000 SBA-backed loan to NEOS in May, 1979.

19. Mr. Logan was elected as NEOS Vice-President in June,
1979[4] and resigned from this office on December 28,1979.

20. On several occasions in 1978 and 1979, NEOS attempted to
hire Mr. Logan as a full-time officer. In early or mid-1978, Mr.
Logan rejected a NEOS offer to serve as its Treasurer at an annual
salary of $35,000. Mr. Dembowski frequently invited Logan to join
NEOS as an officer and informed Shawmut Bank officials on two
occasions about his interest in Logan. In September, 1979, both Mr.
Dembowski and NEOS Treasurer and Director, John Conway, expressed
to Mr. Logan their interest in his becoming President of NEOS,
although Mr. Logan did not regard these discussions as formal job
offers.

21. In June or July, 1979, Mr. Logan prepared financial
projections for NEOS which he understood were to be submitted with
a NEOS SBA loan application. In September, 1979, Mr. Logan received
and endorsed a check from NEOS for $300 for his preparation of the
financial projections.

22. On three separate occasions in 1979, Mr. Logan received
and endorsed checks from NEOS, which he had characterized as
reimbursements, for loans to officers who had used Mr. Logan's
personal credit card. The first two checks for $450 and $483.35
were reimbursements for out-of-state trips by NEOS officers.[5] The
third check for $67.20 was a reimbursement for dinner. On each
occasion, Mr. Logan allowed NEOS officers to use his personal
credit card to cover NEOS' expenses.

23. By the end of 1979, NEOS owed money to Logan for loans
which he had advanced through the use of his personal credit card,
including $570 for a business trip in December, 1979. Mr. Logan
testified that NEOS continued to owe him money through 1980.
24. By the latter part of 1979, NEOS needed additional
capital. During the fall of 1979, Mr. Dembowski and Mr. Sacks
discussed the availability of loans from Mass. Teck, and NEOS
thereafter notified Mass. Teck that it wished to become a loan
candidate. NEOS filed a formal loan application for $200,000 with
Mass. Teck on January 15,1980, although Mass. Teck was aware of
NEOS' application in December, 1979 and had commenced its
investigation of the anticipated application well before the actual
filing date.

25. Mass. Teck scheduled an initial IAC meeting for January

29, 1980 to consider the NEOS loan application. Prior to this
meeting, Mr. Logan played a primary role in the Mass. Teck staff
review of the loan application. Mr. Logan prepared the necessary
staff work including documentation and analysis and rewrote the
NEOS financial projections. Mr. Logan also prepared, with another
Mass. Teck staff member, a flip chart as a visual aid for the
January 23, 1980 IAC meeting. Mr. Logan evaluated the NEOS loan
application for Mr. Sacks and determined that NEOS was qualified
as a Mass. Teck loan candidate. Mr. Sacks thereafter
recommended presentation of the NEOS loan application to the IAC on the basis of Mr. Logan recommendation.

26. Mr. Logan attended the January 23, 1980 IAC meeting and
made a three to five-minute staff presentation regarding the NEOS
application. Mr. Logan utilized the flip chart showing his
projections for NEOS and outlined the background of the company
and how much it was seeking. Mr. Logan also displayed a sample of
NEOS' technology. Although Mr. Logan did not state that he was
recommending approval of the loan, both Mr. Sacks and Mr. Kelley
believed that the recommendation of a Mass. Teck staff member was
implicit in an appearance before and presentation to the IAC.
Following Mr. Logan's presentation, the IAC decided to invite the
officers of NEOS to appear before the IAC.

27. Mr. Logan and the NEOS principals attended the second IAC
meeting on February 19, 1980. Mr. Logan introduced the NEOS
principals to the IAC and sat down. Although


Page 44

Mr. Logan did not play an active role at this meeting, he may have
answered a question posed by an IAC member regarding NEOS.
Following the meeting, the IAC expressed skepticism over NEOS'
financial outlook and assigned Mass. Teck staff member Robert
Crowley to investigate the matter.

28. During the three-week period following the February
13,1980 IAC meeting, Mr. Logan met with NEOS officials on four
occasions and discussed the Mass. Teck loan application.[6]
Additionally, Mr. Logan attended a meeting in Waltham on March
17,1980 where the participants discussed ways of raising money for
NEOS. Mr. Logan's activity sheets which he prepared for Mass. Teck
payroll purposes reveal references to NEOS on one dozen occasions
during this period.

29. During a NEOS Board of Directors meeting in January,
1980,[7] Mr. Conway requested that the Board replace Dembowski as
President. During the discussion, Mr. Logan's name was raised as
a replacement. Mr. Logan respondent, "Let's think about it and take
it from there.

30. On the basis of this discussion, Mr. Conway drafted a new
version of the NEOS business plan in January, 1980 which contained
biographical information about Mr. Logan and which stated that Mr.
Logan was a candidate for President of NEOS. Mr. Conway testified
that he notified neither Mr. Logan nor Mr. Dembowski of his changes
to the NEOS business plan. Mr. Conway distributed several copies
of the business plan containing Mr. Logan's name to the investment

community during the period of January to March, 1980.[8]

31. Mr. Logan may have been unaware until March, 1980 that a
NEOS business plan was in circulation containing his resume and
indicating his candidacy for NEOS President.[9]

32. When Mr. Sacks became aware of the NEOS business plan in
mid-March, 1980, he met with NEOS and Mass. Teck officials,
including Mr. Logan, and announced that NEOS would not receive a
loan from Mass. Teck. When the issue of the appearance of Mr.
Logan's name on a NEOS business plan was discussed, Mr. Dembowski
denied that Mr. Logan was to become the President of NEOS.

33. In February, 1979, the Executive Office of Economic
Affairs notified the Commission that certain employees appointed
to positions within the secretariat, including Mr. Logan, Mr. Sacks
and Mr. Kelley, were required to file annual financial disclosure
statements.

34. In April, 1979, the Commission mailed to Mr. Logan a
financial disclosure form for 1978 together with instructions for
filing. Mr. Logan received the form and instructions on April 12,
1979 at the office of Mass. Teck. Mr. Logan read the instructions
for ten to fifteen minutes and discussed with Mr. Kelley whether
they should file the form. Following this discussion, Mr. Logan
quickly filled out the form. Mr. Logan testified that he filled out
the form "hastily" and "gratuitously" to get the matter out of the
way before the form became lost. Mr. Logan directed Esther Larson
to type a copy of his handwritten form. Mr. Logan signed the form
on April 12,1979 and mailed it to the Commission. Mr. Logan did not
allege to the Commission at the time of his 1978 or 1979 filings
that he had been improperly designated as a reporting employee.

35. Mr. Logan did not disclose in either his original April,
1979 filing or in his amended filing in July, 1979 that he was a
Director of NEOS in 1978, that he was employed by NEOS and
Compactor in 1978, or, alternatively, that he was engaged in the
private practice of accounting in 1978. Further, Mr. Logan failed
to list the income which he derived from businesses such as NEOS
with which he was associated, including the private practice of
accounting.[1O]

Page 45

36. Mr. Logan testified that he filed his 1979 United States
and Massachusetts Income Tax Returns on April 15, 1979 and included
within his computation of gross income for 1978 the compensation
which he had received from NEOS and Compactor.

37. In January, 1980, the Executive Office of Economic Affairs
again designated Mr. Logan as an employee subject to the financial
disclosure law, G.L. c. 268B. Accordingly, Mr. Logan received a
1979 SFI form and instructions from the Commission in April, 1980.
Mr. Logan reviewed the form and instructions and determined that
they had not changed from the previous year. Mr. Logan thereupon
filled out the form as "gratuitously" as in 1979. Mr. Logan did not
disclose in his 1979 SFI that he was a Director and Vice-President
of NEOS in 1979, that he had received reimbursements from NEOS in
1979,[11] that he was employed by NEOS in 1979, or, alternatively,

was engaged in the private practice of accounting in 1979.


III. Decision



The Respondent has been charged with violating Sections 3(b),
4(a), 6, 23(a), 23(e) and 23(f) of Chapter 268A and Section 7 of
Chapter 268B. We will address these charges separately.

A. Jurisdiction under Chapter 268A.


Mr. Logan initially contends that he was not a state employee
within the meaning of Section 1(q) of Chapter 268A because neither
the Foundation nor Mass. Teck are state agencies within the meaning
of Section 1(p) of Chapter 268A, Alternatively, Mr. Logan argues
that it is unfair to impute to him any knowledge that either the
Foundation or Mass. Teck is a state agency. We agree with the
Petitioner that the Foundation and Mass. Teck are state agencies
and that Mr. Logan is therefore a state employee for the purposes
of Chapter 268A. We will consider Mr. Logan's alternative argument
in due course.


1. Foundation

Section 1(p) of Chapter 268A defines state agency as "any
department of a state government including the executive,
legislative or judicial, and all councils thereof and thereunder,
and any division, board, bureau, commission, institution, tribunal
or other instrumentality within such department, and any
independent state authority, district, commission, instrumentality
or agency, but not an agency of a county, city or town." On the
basis of our review of the Foundation's enabling legislation and
evidence presented during the hearings, we conclude that the
Foundation complies with this definition as an independent
instrumentality. Contrary to Mr. Logan's assertion, we find ample
interrelation between the Foundation and Commonwealth to warrant
the application of Chapter 268A to the Foundation.

Under the terms of the Foundation's enabling legislation,
Chapter 843 of the Acts of 1969, the Foundation was created to
accomplish the public purposes of encouraging, prompting and
assisting scientific and technological development in the
Commonwealth. The Governor appointed the Foundation's governing
board members and, during the Foundation's existence, it received
an annual appropriation from the General Court. The Foundation was
also subject to an annual audit by the State Auditor and used
copies of the official seal of the Commonwealth on its stationery
and forms. We regard the interrelation between the Foundation and
the Commonwealth to be sufficient for the purposes of the
application of Chapter 268A. While it may be true that the
Foundation's organizational structure was more akin to a
corporation rather than to a traditional public sector agency,[12]
we do not believe that the application of Chapter 268A can be
conditioned on the organizational status of an entity. Previous
opinions of the Attorney General and Commission have applied the

definition of state agency broadly to a wide range of entities, and
we find no reason to depart from this policy on the facts of this
case. See, EC-COI-79-131; EC-COI-79-105; Attorney General Conflict
Opinion No. 856 (division of savings bank life insurance); Attorney
General Conflict Opinion No. 855 (governor's council on vocational
education); Attorney General Opinion No. 548 (Lowell Technological
Institute of Massa-

Page 46

chusetts Research Foundation); W.G. Buss, "The Massachusetts
Conflict-of-Interest Statute: An Analysis", 45 B.U. Law Rev.
299,309(1965).

Further, we do not believe that the General Court intended to
exempt the Foundation from the provisions of Chapter 268A when it
created the Foundation in 1969. To the contrary, the terms of the
enabling legislation and, in particular, Section 10 of Chapter 843
of the Acts of 1969, demonstrate a legislative perception of the
need for standards of conduct by Foundation employees and officers
which are consistent with Chapter 268A. Moreover, our examination
of the progression of legislative drafts which culminated in the
passage of Chapter 843 of the Acts of 1969 reveals that the
specific issue of exempting the Foundation from Chapter 268A was
at no time raised or considered by the General Court.[13]


2. Mass. Teck

We conclude that Mass. Teck is a state agency within the
meanings of Section 1(p) of Chapter 268A. By its terms, Mass.
Teck's enabling statute applies the provisions of Chapter 268A to
all directors, officers and employees of Mass. Teck. See, M.G.L.
c. 40G, s.2.[14]


3. Status as a State Employee

Section 1(q) of Chapter 268A defines a state employee in
relevant part as follows:

a person performing services for or holding an office,
position, employment, or membership in a state agency, whether
by election, appointment, contract of hire or engagement,
whether serving with or without compensation, on a full,
regular, part-time, intermittent or consultant basis,
including members of the general court and executive
councils..

Inasmuch as we have previously concluded that the instrumentalities
which employed Mr. Logan between December, 1976 and April, 1980 are
state agencies within the meaning of Section 1(g) of Chapter 268A,
we conclude that Mr. Logan performed services for a state agency
on a "fulltime, part-time, intermittent or consultant basis" within
the meaning of the above-cited definition of state employee.


3. Chapter 268A Allegations


1. Section 3(b)

The Petitioner contends that Mr. Logan violated Section 3(b)
of Chapter 268A by receiving $300 from NEOS in 1979 as private
compensation for his assistance in preparing financial projections
for an SBA loan application. We agree.

Section 3(b) prohibits a state employee ,"otherwise than as
provided by law for the proper discharge of official duty, directly
or indirectly . . . [to] receive anything of substantial value for
himself for or because of any official act or act within his
official responsibility performed or to be performed by him."

Mr. Logan admits receiving $300 in private compensation from
NEOS in 1979 but claims that the preparation of financial projects
was outside of his official responsibility at Mass. Teck. We have
reviewed the record and find substantial and credible evidence
which demonstrates that the preparation of financial projections
was within Mr. Logan's responsibilities both at the Foundation and
at Mass. Teck.[15] Further, we find that Mr. Logan's receipt of
$300 from NEOS was not as provided by law for the proper discharge
of his official duty.[16] We conclude that the $300 which Mr. Logan
received from NEOS constitutes something of substantial value. See,
Commonwealth v. Famigletti, 4 Mass. App. 584,354 N.E. 2d 890(1976).

Mr. Logan argues that he was unaware of the provisions of
Chapter 268A and therefore had not inteni to violate the statute.
Even assuming that Mr. Logan was unaware of the provisions of
Chapter 268A[17] the issue of Mr. Logan's intent is irrelevant to
our finding of a violation of Section 9(b). Commonwealth v. Dutney,
4 Mass. App. 353,369,375,348 N.E. 2d 812(1976); In the Matter of
C. Joseph Doyle,

Page 47

Commission Adjudicatory Docket No. 109, Decision and Order, p. 7
(June 18, 1980). See, Final Report of the Special Commission on
Code of Ethics, 1962 House Doc. No. 3650, at 11.

Accordingly, we find by a preponderance of evidence that Mr.
Logan violated Section 3(b) by receiving $300 from NEOS in 1979 as
private compensation for his assistance in preparing financial
projections for an SBA loan application. We disagree with Mr.
Logan's contention that the standard of proof applicable in
Commission. proceedings is "proof beyond a reasonable doubt". We
have fully treated this matter previously and find no reason to
repeat that discussion here. See, In the Matter of James J. Craven,
Jr., Commission Adjudicatory Docket No. 110, Decision and Order,
pp. 10-12 (June 18, 1980). See, also, Steadman v, Securities and
Exchange Commission, U.S., 101 S. Ct. 999 (February 25, 1981) where
the United States Supreme Court added further support to our view
that Commission findings need be supported by a preponderance of
evidence rather than by stricter standards of proof.


2. Section 4(a)

We agree with the Petitioner that Mr. Logan violated Section
4(a) of Chapter 268A by receiving $600 in private compensation from
Compactor in 1978 for the preparation of Compactor's Massachusetts
Corporation Excise Tax Return. Section 4(a) prohibits a state

employee from". otherwise than as provided by law for the proper
discharge of official duties, directly or indirectly [to] receive
or request compensation from anyone other than the Commonwealth or
a state agency, in relation to any particular matter in which the
Commonwealth or a state agency is a party or has a direct and
substantial interest". Section 1(k) of Chapter 268A defines
"particular matter" to include submissions. Since 1963, both the
Attorney General and more recently the Ethics Commission have
advised state employees that state tax returns are submissions and
are therefore particular matters within the meaning of Section
1(k). Further, these Advisory Opinions have consistently stated
that the Commonwealth is a party to and has a direct and
substantial interest in state tax returns and in the collection of
state taxes. See, Attorney General Conflict Opinion Nos. 645, 154,
2; EC-COI-80-16, EC-COI-79-23. See, also, Commission Compliance
Letter 80-7 (May 23, 1980). Accordingly, Mr. Logan's receipt of
$600 from Compactor for the preparation of Compactor's
Massachusetts Corporation Excise Tax Return involved a matter of
direct and substantial interest to the Commonwealth. Inasmuch as
Mr. Logan prepared the tax return for Compactor and received
compensation from Compactor while serving as a state employee we
conclude that Mr. Logan violated Section 4(a) of Chatper 268A.

Mr. Logan concedes that he received $600 from Compactor in
1978 for the preparation of a state tax return but claims that his
supervisor and agency head at the Foundation were aware of his
private arrangement with Compactor and had condoned it. Even
assuming that Mr. Logan's superiors had approved of the
arrangement, their condonation does not establish a defense for Mr.
Logan or otherwise exempt him from the provisions of Chapter 268A.
See, In the Matter of Collector-Treasurer's Office of the City of
Boston, et al., Commission Disposition Agreement pg. 8 (March
2,1981). As a matter of sound policy, to hold otherwise would
legitimize an agreement by the supervisors of a state agency to
undermine the provisions of Chapter 268A. Evidence of condonation
is relevant, however, in determining the sanctions which the
Commission will impose under Section 4(d) of Chapter 268B following
the finding of a violation. Accordingly, we will consider the
evidence surrounding the condonation of Mr. Logan's activities at
an appropriate point in this Decision.


3. Section 6

The Petitioner alleges that Mr. Logan violated Section 6 of
Chapter 268A by participating in the Mass. Teck review and
evaluation of the NEOS loan application while he was negotiating
or had an arrangement with NEOS concerning prospective employment.
On the basis of our review of the record, we conclude that Mr.
Logan's actions did not constitute a violation of Section 6.[18]
In particular, we find insufficient persuasive evidence from which
we can conclude that

Page 48

Mr. Logan was actively negotiating with NEOS or had an arrangement

with NEOS concerning prospective employment. While a NEOS business
plan containing Logan's name as a NEOS presidential candidate was
apparently circulating in January, February and/or March, 1980, we
find insufficient evidence to conclude that Mr. Logan was aware of
the plan prior to March or had authorized its distribution.
Although there is evidence that NEOS had offered positions to Mr.
Logan in 1978 and 1979, we are not persuaded that Mr. Logan was
continuing to negotiate with NEOS in 1980. In particular, we note
that when Mr. Conway raised the possibility in January, 1980 of
Mr. Logan becoming President of NEOS, Mr. Logan s response was
neutral. While there are other inferences in the record from
which we could arguably speculate that Mr. Logan was negotiating with
NEOS, we find such inferences, as a whole, unpersuasive.


4. Section 23

Section 23(a) of Chapter 268A prohibits a state employee from
"accept[ing]" other employment which will impair his independence
of judgment in the exercise of his official duties". The record is
clear that Mr. Logan received $600 in pnvate compensation from
Compactor and over $1300[19] from NEOS during the period in which
he was the primary staff person assigned by the Foundation and
Mass. Teck to assist these companies. The compensation, moreover,
was intended to pay Mr. Logan for services which were within areas
of his official responsibility at the Foundation and Mass. Teck.
We therefore conclude that Mr. Logan's acceptance of private
compensation from the companies which he was assisting as a state
employee compromised his impartiality and independence of judgment
in violation of Section 23(a).

Section 23(e) of Chapter 268A prohibits a state employee from
engaging in". . . conduct [which would] give reasonable basis for
the impression that any person can improperly influence him or
unduly enjoy his favor in the performance of his official duties.
. ." Section 23(f) of Chapter 268A prohibits a state employee from,
". . . pursu[ing] a course of conduct which will raise suspicion
among the public that he is likely to be engaged in acts that are
in violation of his trust."

We conclude that Mr. Logan violated both provisions by his
conduct during the period of December, 1979 through February, 1980.
By the end of 1979, NEOS owed money to Logan from the use of Mr.
Logan's credit card and from personal loans which he had advanced
to NEOS. During this period, NEOS notified Mass. Teck that it was
intending to apply for a large loan, and Mr. Logan accepted the
Mass. Teck assignment to investigate and review the anticipated
application prior to the January 23, 1980 IAC meeting. It is clear
that Mr. Logan played a primary role in the Mass. Teck staff review
and recommended NEOS as a qualified applicant. The IAC later
recognized that NEOS' financial picture, which had been based in
part on Mr. Logan's input, was unduly optimistic and warranted
further investigation.

Mr. Logan should not have involved himself in any way in the
Mass. Teck review of the NEOS loan application and should have

immediately disclosed his financial connection with NEOS when he
received the assignment to review the application. We conclude that
by advancing his personal funds to NEOS during the period of his
investigation of the merits of the NEOS loan application, Mr. Logan
created the impression that NEOS could unduly enjoy favor in the
performance of his official duties and raised suspicion that his
actions were in violation of his trust.


C. Jurisdiction under Chapter 268B

We agree with the Petitioner that Mr. Logan was a public
employee within the meaning of Section 1(o) of Chapter 268B and was
therefore properly designated as a reporting person for 1978 and
1979[20] The definition of public employee under Section 1(o) of
Chapter 268B applies to any person who holds a major policy-making
position in a governmental body. Section 1(e) defines a major
policy-making position as

Page 49

". . .any person whose salary equals or exceeds that of a state
employee classified in step one of job group XXV of the general
salary schedule contained in section forty-six of chapter thirty
and who reports directly to said executive or department head". We
find that Mr. Logan complies with this definition. His annual
salary exceeded the statutory threshold, and he regularly reported
directly to the administrative head of the Foundation and Mass.
Teck. Notwithstanding Mr. Logan's assertions that his policy-making
role was minimal, we find that evidence such as Mr. Logan's
presentations to the IAC confirms Mr. Logan's direct reporting
relationship to his executive or department heads.


D. Chapter 268B Allegations

We agree with the Petitioner that Mr. Logan filed false SFIs
in both 1978 and 1979 in violation of Section 7 of Chapter 268B
and, accordingly, we will order appropriate sanctions. However, we
do not concur with the Petitioner's Contention that the false
filings were intentionally motivated and we therefore find no need
to impose maximum sanctions in each instance or to commence
proceedings for perjury.[21]

1. 1978 SFI


The evidence establishes that Mr. Logan was a NEOS Director
in 1978 and that he was employed by NEOS and Compactor in 1978.
Further, Mr. Logan received in excess of $1,000 in income from
NEOS.[22] Inasmuch as the 1978 SFIs which Mr. Logan prepared,
signed and filed do not disclose that he was a NEOS Director, that
he was employed by NEOS and Compactor in 1978 or that he received
in excess of $1,000 income from NEOS in 1978, we conclude that Mr.
Logan filed a false 1978 SFI.[23]


2. 1979 SFI

The evidence establishes that Mr. Logan held the offices of
NEOS Director and Vice-President in 1979, that he received
reimbursements from NEOS in 1979 totalling $1,000.25, and that he
was employed by NEOS in 1979. Inasmuch as the 1979 SFI which Mr.
Logan prepared, signed and filed did not disclose his NEOS offices,
his reimbursements from NEOS and his employment with NEOS in 1979,
we conclude that Mr. Logan filed a false 1979 SFl.


3. Intentional False Filing

On the basis of our review of the record, we find that Mr.
Logan's conduct in preparing and filing his 1978 and 1979 SFIs did
not rise to the level of intentional and deliberate false filings,
as alleged by the Petitioner. We do find, however, that Mr. Logan
demonstrated a cavalier and reckless approach in his filings. The
Supreme Judicial Court has recognized that the filing of SFIs
provides a means "which the Legislature or the people could believe
to be rationally related to the achievement of the legitimate goal
of assuring the people of 'impartiality and honesty of public
officials (s.1 of the proposed new G. L. c. 268B)"'. Opinion of the
Justices, Mass. Adv. Sh. (1978) 1116, 1131, 376 N.E. 2d 810, 819.
The law requires a commitment to a reasonable degree of care and
diligence in fulfilling this legislative goal. We expect no less
from certified public accountants such as Mr. Logan who serve in
positions of public trust.

On the basis of the foregoing, we conclude that Louis L. Logan
violated Sections 3(b), 4(a) and (e) and (f) of General Laws
Chapter 268A and Section 7 of General Laws Chapter 268B. Pursuant
to our authority under Section 4(d) of Chapter 268B, we hereby
order Mr. Logan to pay the civil penalties as set forth below. In
arriving at these penalties for violations of Chapters 268A and
268B, we have carefully considered the mitigating factors raised
by Mr. Logan and

Page 50

in particular are aware that the practice of the Foundation and
Mass. Teck in advocating private companies may have created
ambiguity for Mr. Logan over his loyalty to the Commonwealth. While
this factor does not excuse Mr. Logan's violations of Chapter 268A,
it does furnish a basis for our decision to impose less-than-
maximum penalties in this case. Accordingly, we order Louis L.
Logan to:

1. Pay $300 (three hundred dollars) to the Commission as
reimbursement for the amount of compensation which he received from
NEOS in violation of Section 3(b) of Chapter 268A.[24]

2. Pay $200 (two hundred dollars) to the Commission as a civil
penalty for receiving compensation from NEOS in violation of
Section 3(b) of Chapter 268A.

3. Pay $600 (six hundred dollars) to the Commission as
reimbursement for the amount of compensation which he received from
Compactor in violation of Section 4(a) of Chapter 268A.

4. Pay $200 (two hundred dollars) to the Commission as a civil

penalty for receiving compensation from Compactor in violation of
Section 4(a) of Chapter 268A.

5. Pay $500 (five hundred dollars) to the Commission as a
civil penalty for his violations of Sections 23(e) and (f) of
Chapter 268A.[25]

6. Pay $750 (seven hundred fifty dollars) to the Commission
for the false Filing of his 1978 SFI in violation of Section 7 of
Chapter 268B.

7. Pay $750 (seven hundred fifty dollars) to the Commission
for the false Filing of his 1979 SFI in violation of Section 7 of
Chapter 268B.

We order Mr. Logan to pay these penalties totalling $3,300
(three thousand three hundred dollars) to the Commission within
thirty days of receipt of this Decision and Order.

---------------

[1] The record is not precise on this point. Although Esther
Larson. a Mass. Teck bookkeeper. testified that she believed Mr.
Logan's 1979 salary to be $29,700, Mr. Logan's 1979 Statement of
Financial Interests states that he received $27,555 in income from
Mass. Teck in 1979. Accepting either version, it is clear that Mr.
Logan's salary level as of January 1, 1979 exceeded $21,162 which
represents the salary for state employees classified in Step One
of Job Group XXV of the general salary schedule. See G.L. c. 268B,
s.1(l).
[2] The purpose of a Fifth check for $300 which Mr. Logan received
in 1978 is questionable. Michael Dembowski, the President of NEOS,
originally testified that the check was for private accounting
services which Logan had rendered but later changed his testimony
to say that the check was for a flight or loan. Mr. Dembowski
conceded, however, that he was uncertain and was speculating. Mr.
Logan could not recall the purpose of the check, which was written
to him on the same date on which NEOS wrote a $690 check to Mr.
Logan in partial payment for his prior financial services.
The Petitioner should have removed the uncertainty of purpose
for this check by subpoenaing NEOS' financial records which would
presumably have indicated how NEOS characterized the check for its
accounting purposes. Although there are inferences suggesting that
the check was intended as compensation to Mr. Logan. the inference
are not persuasive, and we note that the Petitioner has chosen not
to address or pursue this point.
[3] Although Mr. Logan claims that his employers knew about and
approved his serving on the NEOS Board of Directors during this
period, the record does not furnish corroborating evidence that any
Mass. Teck or Foundation officials knew about the directorship
prior to December, 1979. Mr. Sacks denies such knowledge until
December, 1979; Mr. Kelley had no clear recollection of a
discussion with Logan over a NEOS directorship and could confirm
only a discussion with Mr. Logan over joining the NEOS Board of
Advisors; Robert Crowley. a Mass. Teck employee testified that he
did not know about Logan's directorship with NEOS until an IAC
meeting in 1980. It is also notable that Mr. Logan never formally notified the Foundation of his acceptance of the NEOS directorship;
two months earlier, Mr. Logan had sent to Mr. Kelley a copy of his
acceptance of the NEOS Advisory Board offer.
[4] There is persuasive evidence which supports this point. Mr.
Logan, through his attorney admitted in his Answer to the
Petitioner's Order to Show Cause that he had been elected on June
25. 1979 as NEOS' Vice-President. Not only do NEOS' corporate
records verify Mr. Logan's election and service as a NEOS Vice-
President, but also Mr. Logan's December 28,1979 letter to NEOS
states that he is resigning as an officer and director; Mr. Logan
testified that only the positions of President, Vice-President,
Treasurer and Clerk could be characterized as NEOS corporate
officers. Even assuming that Mr. Logan was not active in the Vice-
Presidency and that the NEOS corporate records were not accurate
in all respects, we cannot adopt Mr. Logan's assertion that he did
not serve as the NEOS Vice-President in 1979.
[5] Contrary to the allegation in the Petitioner's Order to Show
Cause, there is no evidence that Mr. Logan actually participated
in these trips. The extent of Mr. Logan's participation, however,
is in-material to whether he received reimbursements.
[6] Robert Henderson, a Shawrnut Bank official testified that Mr.
Logan informed him at one such meeting in late February,1980 that
he was going to join NEOS as a financial Vice-President. In view
of Mr. Logan's denial of this statement as well as our uncertainty
with Mr. Henderson's testimony, we are unpersuaded by Mr.
Henderson's testimony on this point.
[7] Mr. Conway was not certain about this date.
[8] Although Mr. Dembowski testified that the business plan
containing Mr. Logan's name may have been in circulation as early
as October or November, 1979. we regard Mr. Conway to be a more
credible witness on this point inasmuch as he prepared the business
plan. We have no doubt that such a plan existed.
[9] Although tot free from doubt, we tend to credit Mr. Logan's
testimony on this point. While there is evidence in the record,
particularly in Mr. Logan's March 12, 1980 discussion with Mass.
Teck employee. Esther Larson, which creates an inference that Mr.
Logan was not surprised to learn about the business plan containing
his name, we do not find Mr. Logan's testimony to be untenable, as
suggested by the Petitioner.
[10] Question C-I of the 1978 Statement of Financial Interests
(SFI) directed Mr. Logan to identify each business with which he
was associated in 1978 as an employee or director. Question C-3
directed Mr. Logan to identify the amount of income, if greater
than $1,000, which Mr. Logan had derived from any of the businesses
identified in Question C-1. The instructions to both question
contained specific examples of how Mr. Logan should have reported
this information."
[11] Question I on the 1979 SFI directed Mr. Logan to identify
certain reimbursements which he had received in 1979. The
instructions to Question 1 explained that reimbursements in excess
of $100 had to be reported if the source was a person having a
direct interest in a matter before a governmental body, and
contained specific examples of how Mr. Logan should have reported
the reimbursements from NEOS.
[12] In 1972, the Attorney General advised the Foundation that the
liability of its governing board members was comparable to the
liability of the board of directors of a corporation. See, 1972-73
Attorney General opinion No. 10.
[13] See, 1969 House Doc. No. 46, 1969 Senate Soc. No. 1439, 1969
Senate Doc. No. 1555, and 1969 House Doc. No. 5340.
[14] The provisions of Section 2 of Chapter 40G appear in paragraph
6 of the findings of fact.
[15] The testimony of Messrs. Dembowski, Conway and Kelley as well
as documents prepared by Mr. Logan support this point.
[16] Both Mr. Sacks and Mr. Kelley testified that the receipt of
additional compensation or remuneration by Mr. Logan for acts
within his official responsibility would be improper.
[17] In view of Mr. Logan's correspondence to NEOS described in
paragraphs 15 and 16 of the findings of fact, we find the
contention somewhat doubtful.
[18] Section 6(a) of Chapter 268A provides in relevant part as
follows:
Except as permitted by this section, any state employee who
participates as such employee in a particular matter in which to
his knowledge he, his immediate family or partner, a business
organization in which he is serving as officer, director, trustee,
partner or employee, or any person or organization with whom he is
negotiating or has any arrangement concerning prospective
employment, has a financial interest, shall be punished by a fine
of not more than three thousand dollars or by imprisonment for not
more than two years, or both.
[19] The $1,300 figure does not include $212 which Mr. Logan
characterized as "expenses" or $300 for whose purpose Mr. Logan
could not account.
[20] In view of our jurisdictional conclusion, we need not reach
the issue of whether Mr. Logan is estopped from now challenging
his status as a reporting person. In essence, Mr. Logan contends
that he was entitled to file SFIs for 1978 and 1979 with impunity
because he was unaware that he had been designated as a reporting
person or was otherwise subject to the provisions of Chapter 268B.
We find the contention somewhat strained, particularly where Mr.
Logan prepared, reviewed and signed both SFIs and at no time prior
to the institution of thes proceedings
[21] Mr. Logan signed both the 1978 and 1979 SFIs under the pains
and penalties of perjury.
[22] Mr. Logan received fees totaling $1,217 from NEOS in 1978.
Even assuming that we disregard $212 which Mr. Logan billed as
"expenses", the remaining sum exceeds $1,000. While we could have
arguably characterized as an honorarium the $25 which Mr. Logan
received for his service for the NEOS Board of Advisors, Mr. Logan
has not raised this point. Moreover, our adoption of this argument
would only justify further violations inasmuch as Mr. Logan stated
in his 1978 SFI that he received no honoraria.
[23] We alao find that Mr. Logan failed to report the maintenance
of a private accounting practice in his 1978 SFI. However, in view
of our findings of multiple violations with regard to the 1978 SFI,
we need not address this additional omission.
[24] We will not permit Mr. Logan to keep the compensation which he received unlawfully from NEOS and Compactor. See, In the Matter
of Joseph Counter, Commission Disposition Agreement, p. 3,
(February 12, 1980); In the Matter of Badi Foster, Commission
Disposition Agreement, p. 5. (October 7,1980.)
[25] Since we have already add penalties under Sections 3(b) and
4(a) for conduct which also forms the basis of a violation of
Section 23(a), we find no need to impose a separate penalty for Mr.
Logan violation of Section 23(a).

End Of Decision